Sales of new cars go into skid First-quarter figures 11.9 percent below those a year ago

April 11, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

New car sales in Maryland, an indicator of the state's economic health, declined nearly 15 percent last month from a year ago while they increased slightly nationwide.

The decline here marked the ninth time in 10 months that sales did not keep pace with the corresponding period in 1995, according to registration figures released yesterday by the Motor Vehicle Administration.

"I'm not sure why, but it seems that sales are more anemic in the Maryland and the Mid-Atlantic region than in other parts of the country, said John Sophocles, general manager of Jerry's Chevrolet in the Parkville section of Baltimore County.

According to MVA figures, dealers sold 20,853 new cars and light trucks last month. That was down 14.96 percent from the 24,524 vehicles sold in March 1995. Dealers had 21 selling days last month, two fewer than during the same period last year.

For the first three months of 1996, Maryland dealers sold 64,706 new vehicles, 11.9 percent below the 73,485 vehicles sold in the first quarter of 1995.

Nationwide, sales of cars and light trucks were up 4.1 percent during the quarter, according to Automotive News, an industry trade publication.

"It has a lot to do with local conditions," said Eric Swanson, vice president of Ernie Swanson Oldsmobile in Glen Burnie. "A lot of jobs have been terminated at Westinghouse," he said, referring to the defense complex in Linthicum recently acquired by Northrop Grumman Corp.

The defense plant -- Maryland's largest manufacturing employer -- has eliminated about 9,000 jobs in the state since military spending began declining in 1989. Many of them were engineering positions paying $50,000 to $65,000 a year.

"This area used to be recession-proof," said Mr. Swanson. "Westinghouse was booming, NSA [the National Security Agency] was booming and federal employment was strong. But that's not the case anymore. Things are slowing down."

Mr. Sophocles agreed. He said the decline in state and federal government employment "has had a major impact on the auto market in this area. People are nervous. Job security is nonexistent in the '90s."

Michael Conte, director of the Regional Economic Studies Program at the University of Baltimore, supported the auto dealers' suspicions. He said that while sales of big-ticket durable items -- including cars -- have been increasing by one-quarter percent a month in the United States for 12 months, and have been declining in Maryland by almost 0.6 percent a month.

"There are a couple of reasons for this," he said. "First, Maryland's personal income growth has been slower than for the nation as a whole. That accounts for part of it, but it can't account for all of it."

Mr. Conte said he believes that federal workers' nervousness about their future employment has had a significant impact on durable good sales in the state. But he thinks things could soon be turning for the better.

"The Republicans are not pursuing the same agenda, and I think federal employees are beginning to feel a little safer," he said. "In any election year, the good times roll to a certain extent and I think we are going to see a turnaround in this disparity between Maryland and the U.S."

Mr. Swanson said he feels that defense industry cutbacks have added to the problem. Maryland is the fifth-most-dependent state on military contracts and the pain of sharp cuts in the Pentagon budget in recent years have been felt by many large companies in the state, including Westinghouse, Lockheed Martin, AlliedSignal and Northrop Grumman. Hundreds of small subcontracting companies either have been driven out of business or have been forced to slash their operations.

"People are running scared," Mr. Sophocles said. "They are not spending money like they did in the past. Even some of the those that have jobs are nervous about being laid off in the future."

Mr. Swanson said that "people are buying out of necessity, not out of desire to own a new car," and buyers are nervous about obligating themselves to car payments for three to five years.

Mr. Sophocles said that those buying are being more economical. "The used car market is very brisk and the lower end of the new car market is very brisk."

He said new vehicles costing less than $15,000 are the hot sellers. "We're selling a lot of S-10 pickups, Cavaliers and Geos."

Mr. Sophocles said some customers are going to the used car lot for up-scale purchases. "They get more bang for the buck there," he said, noting that most of the used cars on his lot are priced between $2,000 and $9,000 and "the hottest part of the market is in the range of $7,000 to $8,000."

He said a new Chevrolet Blazer sport utility vehicle costs about $26,000 to $27,000 fully equipped, but people "can buy one several years old for about 60 percent of the original sticker price."

Maryland dealers sold nearly twice as many used cars last month as they did new models, the MVA reported.

But used car sales are not exempt from the economic problems haunting the state. According to the MVA figures, dealers sold 38,614 used cars last month, down 13 percent from the 44,414 sold in the same month last year.

The average price of a used car was $6,111, compared to $20,209 for a new vehicle.